The Market Risk Capital Charge Is Included in Capital Regulations

question 8

Multiple Choice

The market risk capital charge is included in capital regulations as regulators recognise that changes in market value can impact on an FI's insolvency risk.

• A)Market risk takes into account general market risk, specific risk and operational risk.
• B)FIs with APRA approval can use a combination approach with all risk categories and across all regions.
• C)APRA can increase or decrease capital requirements from the internal model if it considers that it doesn't reflect fully the FI's market risk profile.
• D)All of the listed options are correct.

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Definitions:

Morality

Morality encompasses the differentiation of intentions, decisions, and actions between those that are distinguished as proper and those that are improper. It is often guided by cultural, religious, or philosophical principles.

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A concept in sociology referring to suicides that occur due to a breakdown in social bonds or norms, often in times of social or economic upheaval.

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A system or code of conduct and principles that governs the behavior of individuals within a society, distinguishing between right and wrong.

Individual Precedence

The principle that an individual's rights and interests take priority over those of the collective or group.